money matters

Just a reminder to keep things simple

Today was spent appeasing the tax accountant, and I want to point out something: I've mentioned in the past that I (and my father) ran our own businesses for many, many years without ever doing any of the more expensive and complicated small business things that people sometimes say you have to do if you want to be a Serious Writer. 

That era is in the past now, and I have to say that I long for the days when I was a sole proprietor. It makes sense for us to be doing what we're doing, but JFC, the only reason to do it is because the alternative takes up even more of your time. I do not understand why any Serious Writer would voluntarily choose to spend the day generating fiscal statements when they could be writing, or even just formatting an e-book or fixing that proof that finally arrived from CreateSpace.

Progress report

So, I'm back in action. I got the manuscript back from an adult beta reader, and I think there's some good feedback--it's interesting because many of the same things that confused the 12-year-old also confused the adult.

Speaking of the 12-year-old, her 8-year-old sister caught wind of the profit potential from illustrating books, and now she wants in on the action. (The deal for the older niece is that I'll pay her $10 an illustration for up to six illustrations--I gave her a deadline and everything.) Since the protagonist is seven, I may have the younger niece produce a couple of drawing "by" that character....

Straight Outta Wherever

I just saw Straight Outta Compton today--oh, man. It's pretty great (it just kind of ends, but other than that, it's awesome), and one of the things I thought was really excellent was the enormous focus on how artists get screwed.

Spoilers ahead!

Ice Cube is the one who first gets suspicious of N.W.A.'s manager: Eventually the manager wants him to sign a contract without having a lawyer look at it first, and Ice Cube just walks away from the group completely--he knows he doesn't know enough to understand a contract without a lawyer, and he has a sensitive-enough bullshit detector to know when someone is trying to screw him, so that's that.

Later as a solo artist, Ice Cube gets fed the "We'll pay you after you hit it big. Oh, you just hit it big! Well, we're still not going to pay you." line from a record company executive, so in a scene that made me cackle uncontrollably with delight, he smashes the shit out of the guy's office with a baseball bat! And tells the executive that he can take the cost out of the money he owes him! (Apparently this really happened! I love you, Ice Cube!)

And yes, settling your problems with a baseball bat is not the best way (and I should point out that sometimes the guy with the handy office is not the guy who is screwing you), but Jesus Christ, can I ever relate to the urge.

Most recently we dealt with another attempt to take advantage of an elderly relative, and it bore many similarities to N.W.A.'s problems.

That might sound odd, but a scam is a scam, whether you're a rapper straight outta Compton, a little old lady, or a writer. As I've mentioned before, people who don't want you to use processes you can trust are not people who you can trust.

So here's a little list of things to look out for that mark potential scammers:

1. They target the weak. I can't get specific for obvious reasons, but the elderly relative entered into a business agreement. Then we of the younger generation legally took over authority.

Now, I will say that I never felt good about this agreement. Why? Because the elderly relative was already somewhat addlepated when they made it, and I was open to the possibility that they were being taken advantage of.

Nonetheless, I was willing to carry the ball on this deal, since that's pretty much my job these days. In fact, I was the one who made the phone call informing the other side that authority had legally shifted.

What was truly interesting was what happened next: Nothing.

At least not to me. The other people who took over authority along with me started getting all kinds of calls and e-mails, while I did not.

Isn't that odd? In a business deal, why not communicate with the person who initiated communication with you?

Oh, because that person was most likely given that job because they were the one best-suited to handle this kind of thing? And the last thing you want to deal with is someone who might know the score.

I wonder why that is?

2. They threaten you with doom/promise you the moon. This was the thing that made us all stop and go, Wait a minute. These guys weren't just calling those who they hoped were weak--they were threatening them.

And their threats made no sense. None of us are lawyers, but all of us readily agreed that, given what little knowledge of the law we had, these threats were both remarkably vague and quite extreme.

In addition to the vague threats, there were the gauzy promises of fortune--someday. (And God, the elderly relative just ate that shit up.) Someday, we would make HEAPS of money--HEAPS!!!

Not now, of course. Now we'd get nothing. But SOMEDAY!!!!!!

3. They are not shy about making it personal. Do you give a fuck about how I get along with distant cousins I've met maybe a handful times in my lifetime? No?

These guys did--they cared so much. They were so concerned that we not alienate people whose contact information we don't even have by tanking this deal. Because tanking a bad deal would be disadvantageous to these cousins in some way. This is assuming that they hadn't already tanked the deal for themselves, and we didn't know about it, which was entirely possible, given that we don't actually know each other and don't talk.

And of course these guys stroked the elderly relative like nobody's business, because they aren't business partners--they're friends.

At least these assholes didn't pester the elderly relative after we took over in hopes of getting them to pressure us. Other assholes have.

4. Lawyer? What's a lawyer? Since the elderly relative was merely addlepated, not fully demented, a lawyer did draw up the original deal.

But the amendment to the deal that these guys wanted us to sign? Oh, nobody needs a lawyer for a silly little thing like that.

We're silly little things, so yes, we did get a lawyer specializing in that particular area of law to look at it and tell us that signing the amendment would be (and this is an exact quote) "crazy." Also, we can undo the deal whether they want us to or not.

So what is the other side doing now? They're pretending like our lawyer does not exist. They've been instructed more than once to communicate solely with the lawyer, but they are acting like nobody told them nothing. (And HA! you should have seen the lawyer's professional reserve just vaporize in a red-hot fury over that one!)

Why are they doing this? Please familiarize yourself with point #1 above.

How to be one broke-ass millionaire

One of the things that I've been dealing with lately is people who are making the transition from living off a paycheck to living off a lump sum of money. Now, in these cases, it's because people have retired and are starting to live off their savings. But obviously people who switch from a regular job to indie writing can run into the same issue.

It can definitely be a tricky transition, because if you are a good little saver, you typically don't touch your savings--you salt them away for a rainy day. Then a rainy day (or a rainy rest of your life) comes along, and you don't know how to adjust

As a result not understanding how to manage a lump sum of money so that you can actually live off it, I've personally known two people who 1. had plenty of money, and 2. were broke--at the same time. (It should be noted that BOTH people were trusting absolutely everything to professional money managers.)

How could it be that people can have plenty of money, and yet be broke?

Case #1: This was a few years ago, when my father was still alive. One of his relatives was ailing badly. She desperately needed to move into an assisted-living facility, but she just couldn't afford it.

Except that it turned out that she could. Remember how I mentioned that a million dollars, invested relatively conservatively, could give you an income of $20,000 to $30,000 a year? Well, you can also invest it so that it gives you an income of ZERO dollars a year. Which was how this woman's money was invested.

Worse yet, she didn't even know she had it. Perhaps her husband (who had died) or perhaps a professional money manager (who had since moved on) had made that investment--she didn't know. She was a woman of a certain age, and in her mind, it was somebody else's job to worry about that kind of thing.

You can say that she deserved it for being so oblivious, but she suffered quite horribly as a result of "not being able to afford" appropriate care. Things got pretty bad before my dad decided to intervene and figure out what the hell was going on--because it really didn't make sense to him that she should be so broke.

Because she wasn't.

Case #2: This has been more recent, and it's been a real eye-opener for me because we got focused on this early, so I've been watching the process unfold.

So, again, let's say there's a million dollars that is invested to give an income of $20,000 to $30,000 a year. And it has been providing a lovely supplement to this person's Social Security and pension income, except that she decided that managing the lump sum was too much trouble, so she called in the professionals.

What was the first thing the professionals did? They took that $20,000-$30,000 a year away.

Oh, they didn't steal it, of course not--that would be illegal! They just put it someplace where the person can't get to it. Unless she makes a special request for an "allowance," which will be--well, you know, they have to pay her taxes and of course their fees (which are not low) get deducted out of everything first, so maybe $250 a month? Or less?

The knock on her income is kind of an issue, because this person's cost of living is increasing as they get more frail, and Social Security is looking at her assets and saying, "Why are you getting so much money from us?" She really does need the additional income. And of course the professionals are more than happy to provide her what she needs--by selling off her investments.

Oh, boy.

Not shockingly, we are intervening. There are people in my family who have made it well past 90, and we're not thrilled at the idea of this one running out of money and getting evicted (most likely from a nursing home) 15 years from now. That's where the professionals will lead her--and once they ruin her, they will just walk away. Because their work will be done.

Things to think about

I took yesterday off on purpose, but then I didn't get much sleep last night, so I'll probably be taking today off as well. Tomorrow should be good, though.

Anyway, this is an interesting article from the Wall Street Journal about entrepreneurs and the pitfalls they run into starting a new business. It's definitely applicable to new writers: Don't assume you know what your sales are going to be, don't hesitate to get outside help, learn about the industry (that's something I'll need to get back into when I get further along with this novel), etc. Good stuff.

From the Annals of Marketing Neglect

So, Alicia had a good question:

I'm curious - when you have a moment - how did your books do while you had no time to promote and pay attention to them? I hope well.

Or did you find time for at least keeping track of that?

Now, it seems she thinks that I haven't been paying any attention to my books for the past couple of months as I fixed up the new house. But the truth of the matter is that I haven't done ANY marketing since my brother passed away late last April--in a crisis, I've found that it's best to simplify one's life as much as possible and focus only on the things that are truly essential. As a result, aside from the stuff that cropped up because of something I did a couple of years back, there has been no marketing of my books for almost a year--no Facebook ads, nothing.

How have sales been? Remarkably steady!

With one important caveat: Whenever something changes with Amazon, the level of my sales changes--but then remains steady. Sales are lower since Amazon switched from have a Science Fiction: Series bestseller list to having a Science Fiction: First Contact list--but they have been quite consistent at that lower level.

Compensating somewhat for that lower level is the fact that the book is now on the Science Fiction: First Contact list at Amazon UK.

Wait! This means I am now an INTERNATIONAL BESTSELLING AUTHOR!!! Oh, that's hilarious.

The reason it's hilarious is that I'm still not selling tons of books--not nearly enough to make a living off it or anything. If I needed to do that--well, for starters I would actually write more, but also I would push to get on a bigger bestseller list, like getting back on the general Science Fiction list. Back in those days I was making about $500 a month off of sales of Trust--obviously still not enough to live off, either, but if I had more titles out....

It's getting, it's getting, it's getting kinda hectic

Moving in! It's happening! It's kind of a complicated process because the new place still lacks some key things (like a stove and curtains) but hopefully it will be done fairly soon!

In the meantime, here's a couple of article I thought were interesting but didn't have time to actually write posts about:

This one is about the music market in Japan. Japan has been notable because it's resisted digitization, but guess what's happening right now? Oh, yeah, digitization is happening with a vengeance and all the Japanese labels are being caught out because they thought that Japan was the one market that would never, ever change, so why should they prepare?

I also have to point out something that has always annoyed me with reporting about the Japanese music market: People always report the revenues. So they say (or rather, they used to say), Oh, the Japanese music market is so much better than the U.S. music market because evil, awful digitization hasn't happened there so their revenues are still high!

Anyone see the problem there? Revenues are not profits. If I sell something for $10 that costs me $8 to produce and ship, I have revenues of $10 but profits of only $2. What's so nice about digitization (be it music or books) is that you can sell something for $5 or $3 that costs you next to nothing to make. So yeah, your revenues go down, but who cares?

That one is about dodgy on-line reviews. Businesses are starting to sue people who post negative fake reviews for defamation--something to keep in mind if you're ever tempted to trash someone via sock-puppet.

 

Open Road still not making much sense

This was in the Wall Street Journal (all emphases added):

Forty years ago, "Airport" author Arthur Hailey was one of the country's best-known novelists. Today nine of his 11 novels are out of print in the U.S. and difficult to find even in used bookstores.

That's about to change. This spring, six Arthur Hailey novels, including "Airport" and "Wheels," will be published [by Open Road] in e-book form, priced at $14.99 each.

The article goes on to say that publishers are discovering that e-books are good for backlist revenues.

The re-issuance of the writers' works reflects a broader effort by publishers to mine their inventories of "backlist" titles—books published more than a year ago—in a bid to generate revenue from younger readers.

And it quotes Mark Tavani, editorial director of fiction at the Random House Publishing Group, as saying:

"These [backlist books] aren't front list titles, books that your friends are talking about. But people who shop electronically are willing to load up and try stuff if the price is low."

Notice a slight contradiction there between the first quote and the second two? Younger readers have never even heard of Arthur Halley, and people who read e-books will buy unknown backlist books if they aren't too expensive. So Open Road's plan is to woo readers who have no idea who Hailey is . . . with a FIFTEEN DOLLAR e-book?

Fifteen dollars? For fuck's sake, that's more than any mass market paperback, and many a trade paperback. All for a license to read something--a license that you cannot sell yourself later on.

Oh, and maybe you can't find Hailey in used book stores, but on Amazon? You can buy used copies of his books for a penny. Yes, you have to pay for shipping, so it comes out to a whopping $4. For a hardcover edition.

Hailey is dead. He's been dead for a decade. He's not going to be coming out with a big new book that will create a splash and drive interest in his backlist. If you want to interest new readers in what is to them a new writer, $15 e-books are NOT the way to go.

Evil marketing, good marketing

Today's Wall Street Journal has an interesting pair of compare 'n' contrast articles about on-line marketing.

The first is about the sleazy world of fake Twitter accounts--you can pay people to create huge blocks of Twitter accounts that will follow you and reTweet you and generally make you look more popular than you are, at least to people who give a crap about Twitter.

"If you're not padding your numbers, you're not doing it right," [Ethically-Challenged Rapper] says. "It's part of the game."

Can you guess that I disagree? I mean, if "the game" is to impress some idiot gatekeeper, OK then, but if your goal is to actually reach readers, I don't see how this helps, especially if you are a novelist. If you're not positioning yourself as a non-fiction expert, social media in general isn't all that helpful, and having a bunch of fake followers...? Plenty of real people are already ignoring you on Twitter, trust me. And I'm not even getting into the fact that if you pay for a bunch of fake Twitter accounts to follow you, you have absolutely no guarantee that Twitter won't shut them all down 30 seconds after you buy them.

Ethically-Challenged Rapper's argument in favor of doing this is that it's more cost-effective than advertising on Twitter. I don't know what that says other than that you probably shouldn't bother to advertise on Twitter, either.

(And can I just take a moment to note that it infuriates me when people assume you have to cheat to win. You don't. Remember how people were arguing that paid reviews, while bad, for some reason should be the norm? Remember how that blew up? Nobody likes a cheat.)

Article #2 is about asking fans to give you their e-mail address, so that you have a database of people who already know they like your stuff. (Lindsay Buroker has a lot of useful things to say about this strategy as well.)

Oh, and look! Actual numbers indicating value!

A fan who gives Arcade Fire his or her email address spends, on average, a lifetime total of $6.26 to buy music, merchandise and tickets directly from the Canadian indie-rock act.

Meanwhile, the Icelandic band Sigur Rós boasts an email base of fans worth an average of $10.91. And followers of the progressive rock band Umphrey's McGee generate an average $32.96.

Industrywide, the average fan email address has a value of about $3.78 in direct purchases from artists over the owner's lifetime, according to new data from Topspin Media Inc., a six-year-old Santa Monica, Calif., company that manages online stores for more than 70,000 artists.

That may not sound like much, but it is nearly four times the price of a single from Apple Inc.'s iTunes Store.

Also, as a manger for The Pixies points out, when you've got a mailing list of existing fans, advertising to them couldn't be cheaper--you just shoot out an e-mail, and you're good. The cost savings means that your profit margin on purchases is even better.

The bands that really maximize revenues offer unique (and pricey) goodies exclusively to fans--totally something writers can do. And freebies are always good--according to the article:

Fans who get free music in exchange for an email address are 11 times more likely to make future purchases directly from a band than fans who get nothing for forking over their contact details, Topspin's data show. 

I think I'm getting a migraine....

It must be from the way I've been banging my head against my desk.

OK. Let's back up. Remember how I said that I was switching from listing books directly with Kobo to going through Smashwords, since apparently Kobo can't manage to pay people? (And I did shortly thereafter.)

You might think that I'm a tad oversensitive on this topic, but it is a policy for me: I do not do business with those who make a habit of screwing others over, because I am certain that they will eventually get around to doing the same to me. That's why I pulled out of Google Books back when that was a thing. As I've said before, I regard this policy as major reason I was able to survive as a freelance writer for so many years.

Backing up once again: Remember how Block B was totally screwed by its label? Well, they managed to buy their freedom and are planning to release new music soon. (Yay!)

And what is the guy who ran their old label doing? Giving interviews explaining how he doesn't regret a thing and how everything bad (including the lengthy and no doubt expensive court battle Block B just had with the label he owns) just kind of happened. It just happened. Like the weather. He certainly had nothing to do with it.

Why is this guy giving these kinds of interviews? He's put together a new group. A bunch of people looked at everything that was happening to Block B--not getting paid, having money stolen from their families--and said, "I want that to happen to me!" (And for the record, this guy doesn't run some HUGE company that you simply must sign with. He's had one successful group, and they just ran away as fast as their little feet could carry them!)

Yes, Virginia, apparently a sucker is born every minute.

Hey, look! Amazon is unreliable!

Ever since that outage two days ago, Amazon's Top 100 Free First Contact Science Fiction list has been showing--well, yesterday it was six books, and right now it's two.

Guess what that means for sales of Trang and Trust? In an amazing coincidence, exactly two days ago they fell off a cliff and died!

As I've mentioned, I've been not paying attention to the business end of things especially hard lately, so yeah, I've set myself up to be a classic case study of what happens when you become excessively dependent on one retailer and one method of marketing. Since I don't actually count on the income from my books to live or to feed my familly, it doesn't really matter, but if I did, I'd really be up a tree right now, you know? (And I was going to make an Illuminati joke, but that link went away! Boo-hoo!)

Why did this happen? I don't know. Is it a deliberate evil plan on evil Amazon's part, or just something that will be fixed by the end of business today? I don't know. More important, it doesn't matter. This is what always happens when you become overly reliant on a single client. Always. Always. Always. Good reason; bad reason; no reason at all--all you need to know is that it will always happen. If the income matters to you, plan accordingly.

As for me, I may very well continue to ignore everything, because (as is often the case after a tragedy) I feel a need to simply my life and focus on priorities. In all honestly, selling a lot of books is just not that important to me, especially if it's going to steal focus away from writing new ones. Any advertising campaign is going to be more cost-effective if there are more books behind it, so there's a business rationale for waiting as well, assuming I want one. Of course, it's not like doing a campaign is hard, so maybe I should suck it up. We'll see.

(Oh, and as for working on the audiobook, there's one little glitch in that plan: Contractors and children are not quiet.)

That dream....

Hugh Howey and Kris Rusch both have some good things to say about that fantasy that traditional publishing is gonna make you a star

Howey notes:

As for the 99.9% [of self-published authors] who won't see my level of success, I would point out that 99.9% of those who submit material to the traditional machine will never see a similar level of success. It isn't like our option is to self-publish OR see how well our novel does fronted out on an endcap in a bookstore. Our options are to self-publish OR spend a few years landing an agent, another year selling the book to a publisher, a year waiting for that book to come out, and then three months spine-out on dwindling bookshelves before you are out of print and nobody cares about you anymore. If you're lucky. Most likely, you'll never even get an agent. Because you aren't Snooki.

Could I agree more? No, I could not. I haven't had anywhere near the success of Howey, but I've come sooooo much further in two-and-a-half years of self-publishing than I did in the previous six years of trying to get published traditionally, it's comical. Hello--I HAVE TWO BOOKS OUT. That's two more books than I ever got out going the tradpub route. You can't sit around and say, "Your books would have sold more with a traditional publisher behind them!" because they never would have existed.

And Rusch points out that the headline earners will always be traditionally-published authors, not because they're necessarily earning the most, but because their information is being made available.

Every year, Forbes tallies up the “World’s Top-Earning Authors” and invariably, they’re all traditionally published. Why?  Well, Forbes explains it to you:

  FORBES bases its estimates on sales data, published figures and information from industry sources between June 2012 and June 2013.

In other words, the only place Forbes gets its data is through traditional media. If you earn a million dollars on your latest indie published title, well, that’s between you and your banker. Amazon doesn’t give out the sales figures, nor would Kobo or any other e-book publisher—because that’s your proprietary information. They don’t do it with traditionally published books either.

That information is released by the publisher. So if you’re an indie published writer, and you’re making tens of millions, the only way to get on the Forbes list is to broadcast your earnings to every damn media outlet you can find. (Which I would not recommend, by the way, since you’ll discover relatives that you never knew you had.)

I'll add that if we see the "world's top-earning authors" suddenly making less money, that won't actually mean that bestselling authors or authors in general are earning less. You can't get a good picture of the whole if you only survey one part.

Linky links

This has been all over the place, but hey, read the Wall Street Journal's coverage: Barnes & Noble is spiraling down. The future does not look bright. I'll just reiterate that if you start having problems with B&N not paying you, don't be quiet about it--let other writers know.

This is a post about NBA draft picks that underscores the perils of managing a one-time big payday. The majority of professional basketball players file for bankruptcy within a few years of retirement. It's just human nature to not deal very well with windfalls--it takes serious planning. And honestly, nothing says "Thank you" to Mom and Dad like not having to file for bankruptcy!

Really random link

This is a Wall Street Journal interview with Kid Rock about how he's pricing his concert tickets at $20 but still hoping to make s---tons, or perhaps even f---tons, of money. Interesting stuff--basically he's hoping that by lowering the barriers to entry, he'll 1. sell more tickets, making him more fans in the long run, and 2. make more money, because he'll be getting a share of T shirt and beer sales. (And he's got very high expectations for those beer sales.)

How things have changed

Lindsay Buroker has been doing some excellent posts on building a fan base--well worth a read.

But I was most interested in the post where she reveals her sales numbers for the first month for each new release: 2,000 copies of the fourth book in her Emperor's Edge series, 2,500 copies of the fifth book, and 3,000 copies (and counting) of the sixth book.

Why was that so interesting? Because those numbers really suck!

Or at least they suck by traditional publishing standards.

If Buroker was with a large, commercial publishing house, she'd have to sell between 20,000 and 30,000 copies of each title to get a contract for her next book--and she'd have to do it within a few months of release.

I've said this before, but I'll say it again: This is what makes me happy about self-publishing. A niche novelist with a relatively small audience can make a living on writing alone--writing fiction, no less.

Oh, and I get to read her books!

I didn't really expect anything different

This is an interesting post on Passive Voice (original post by Brian DeFiore--awesomely titled "E-Books and Profitability: What We've Always Said and Publishers Have Always Denied"--here). It's a breakdown of how much HarperCollins makes off of hardcovers vs. e-books, and it includes how much the author gets.

The bottom line? HarperCollins does way better, and writers get royally screwed. Quoth DeFiore:

Look at Harper’s own numbers:

$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author

$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.

I will point out that I make more than $2.62 every time I sell an e-book copy of Trust. Just saying.

Large sums of money

The Passive Voice today posted an article about Patricia Cornwell, the bestselling crime writer who discovered the hard way handing all your money over to someone and saying "You take care of me" is a really bad idea.

Anyway, Cornwell realized there was a problem because she only had $13 million in the bank despite having earned at least $10 million a year for the past four years. The jury rectified the situation by awarding her $51 million.

And yeah, all that is a lot of money--I don't argue that--and there were a couple of comments suggesting that all those large sums are just kind of a blur to people.

Which is a common reaction when figures in the millions are bandied about. Most people (especially writers) think of those kinds of sums as mind-bogglingly huge. And when everything gets lumped together in the "mind-bogglingly huge" department, it all seems like it's kind of the same.

But it's not.

Why not? Well, again we get into the difference between annual income and short-term earnings, which is important for writers to be aware of because our incomes tend to swing up and down dramatically.

Cornwell had four VERY good years. But in this business, four really good years can be followed by four or fourteen or forty really crappy years. Cornwell's income could take a dive for lots of reasons: Maybe people get burned out on Bones-type stories; maybe Cornwell gets sick and can't write.

I think most people without a lot of financial experience think that when you get a windfall, you should go ahead and live off it. Which is another way of saying, spend it. But the problem with spending a windfall is that people tend to spend it all and run out of money, especially if they are younger and have a long life ahead of them. (See: Every bankrupt Hollywood star, ever.)

So I would argue that writers need to look at short-term or one-time earnings as something that they can turn into a source of regular income that will see them through the dry spells and enable them to retire.

The problem is, a large one-time chunk of money provides a surprisingly small annual income, which is why most retirees eventually spend through their savings, even though they receive supplemental income from the government.

A million dollars? Invested relatively conservatively, that generates an income between $20,000 and $30,000 a year. Does that sound like MILLIONAIRE!!!! money to you?

Cornwell's $13 million? Between $260,000-$390,000 a year. Much nicer, yeah. About what the average specialist physician makes. The average specialist. Not, you know, Dr. Oz or Andrew Weil or even a top doctor at a large hospital. Well, at least it's better than being a general practicioner.

If you add in the $51 million the jury awarded her, her annual income finally starts to top $1 million a year--hooray, we're finally in bling territory! Now she can afford that private helicopter and that $40,000-per-month Manhattan apartment! Except for the fact her financial advisors probably spent the money, so I'm not sure how she's going to get it back, and then she'll have to give a big chunk of it to her lawyers...yeah.

I hope Cornwell realizes that, even in Manhattan, there are cheaper apartments.

Why I'm happy to be in this biz

A friend of mine is trying to start a business. Not an expensive business--something that would be part time and low overhead.

Nonetheless, the cost of starting this business is going to be, oh, three or four times what I've spent publishing over the past two years, including the times where I've basically taken a small stack of money and set it on fire. So this person is trying to raise capital, which means asking people for money.

Guess how that's going?

I was thinking about that when I read Joe Konrath's latest post about his efforts with Amazon's exclusivity program (short answer: How well it works totally varies from book to book, and no one knows why).

But Konrath is cool with that (yay, experimentation!) and toward the end of the post, he gets into goals versus dreams, writing:

I got into this business in 2002. Now, for the first time, I'm master of my own destiny, captain of my own ship. The freedom to make my own decisions is, in many ways, more important to me than money. 

As always, when you run your business, you need to set your own attainable goals. "Attainable" means they are within your power. Anything that requires the "yes" or "no" from someone else isn't a goal, it's a dream.

That's exactly the problem my friend is facing: They are making starting their business contingent on getting X amount of money from someone else. Which I think is an approach that may well have to be re-evaluated, but the fact remains that X is a pretty sizeable amount of money for this person, and it's going to take a lot of effort to get it together. So imagine if X was, say, the amount of money it takes to build a prototype CT scanner or a state-of-the-art computerized warehouse: Funding this enterprise on their own would simply be impossible, and all their goals would effectively be dreams. Which would suck.

Isn't it nice that you need so much less money to get into self-publishing? And you don't even need to have all that money at once--you can start small and do more as you can afford it. I published Trang in 2011 and only started experimenting with on-line advertising this year. That lag hasn't hurt anything. Konrath ran his latest batch of marketing experiments using titles that are much older than mine--nobody cares.

And--this is important--it doesn't cost you anything to have a book sitting there, even if it's not selling. That's very different from other kinds of businesses, where unsold inventory ages out and loses value.

Extremely low capital requirements, and unsold inventory that doesn't rack up costs. Self-publishing is a very nice and very unusual business.

How unusual? Konrath's post was picked up by The Passive Voice, and in the comments Randall Wood remarked:

I was discussing Joe’s numbers with a friend the other day. I mentioned that he had hit the 1 million books sold mark, which I thought of as an accomplishment, but I then added the fact that he gave away 600,000 books to get there.

My friend snorted his beer and about choked.

My friend is a successful businessman. He commented that Joes rate-of-return was horrible. Joe thinks otherwise. I would say they are both right depending on their individual points of view.

I would say that the businessman friend is in a normal business. You know, the kind of business where if you give away a free samples, it actually costs you something. If Konrath had given away 600,000 paper books, which he'd paid for at the wholesale rate and then paid to ship, in order to sell 1 million full-price books, then the businessman friend would have a valid point. But giving away digital copies? Costs him nothing, and costs Amazon a fraction of a cent. Konrath's rate of return is just fine, because his expenses are very close to zero.

Extremely low capital requirements, inventory that doesn't rack up costs as it sits there, and samples that are free to the vendor as well as to the customer. This is a GOOD business.

How bad is that bad news?

People who work in health care sometimes experience the following scenario:

A family has a beloved elderly relative, who we'll call Nana. Nana is not "young elderly"--she is 97 years old. Also, she is a diabetic. Also, she has suffered several strokes. Also, she suffers from congestive heart failure. Also, she has a terminal cancer diagnosis.

Needless to say, Nana is a heavy user of the health-care system. Staff at the local ER and ICU can recognize her on sight and try to keep a bed open for her at all times. People who work in the funeral industry automatically hand their cards to her family. Wherever she goes, flocks of expectant-looking vultures follow.

One day, Nana passes away.

The family is TOTALLY SHOCKED by this completely unexpected turn of events. How could Nana die!?! they shriek. They assume the cause must be malpractice and threaten to sue every health-care worker in sight.

If one of these health-care workers can get the family to calm down long enough to ask them why they are so surprised when Nana was obviously so very sick, the answer usually comes out along the lines of, Nana never died before. Those six months in an ICU? She made it through. Those 47 ER visits? She survived every single one.

The problem is that if enough bad news comes out about someone or something for a long enough time, people start to ignore the fact that the news is, in fact, very bad. If Nana holds on for long enough, it doesn't matter that she has one foot in the grave and the other on a greased banana peel: Nana is a survivor. She can't die.

I was reminded of this reading some responses to Barnes & Noble's dismal holiday sales. There has been so much bad news about Barnes & Noble for so long that some people seem to be thinking, well, this can't be that bad--they've survived crises before.

And they have, sure. They may survive this one in one form or another.

But I think writers really have to accept that, no matter how much they like the stores or long for a strong competitor to Amazon, Barnes & Noble may not make it through.

Why not? Well, you have to think like an investor. Basically there are two kinds of investors: Those who invest for income, and those who invest for growth. People who invest for income are looking for regular payments of money, like dividends, and don't care much if a company is growing or not. Those who invest for growth, in contrast, are looking to put a small amount of money into a business that is growing, and to eventually cash out a large amount of money. 

Two years ago, Barnes & Noble suspended its dividend, thereby ensuring that income investors would not be interested in the company. So it became a growth play.

The problem? Barnes & Noble's brick-and-mortar book business was shrinking, not growing.

Enter the Nook business--e-reading devices and e-books, a new growth business! That attracted $300 million from Microsoft and $89.5 million from Pearson, as well as other investment from other companies. These companies paid for shares in the Nook portion of Barnes & Noble as though that business on its own was worth more than Barnes & Noble in its entirety.

The problem is that, as we just discovered, the Nook business is doing horribly. It is not growing, it is shrinking. It is doing worse this year than last, it is doing worse than its competition, and it is doing worse in e-books than the traditional publishers who supply them.

It is difficult to attract growth investors when you are not growing, especially when others in your industry are. Not shockingly, people are wondering if those outside investors didn't make a mistake by putting so much money into the apparently not-so-valuable Nook business.

Now, a lot of things could happen here. A company could decide, "Gee willikers, no one's ever really given the Nook business a chance!" and plow a ton of money and effort into it. Despite the fierce competition in the sector, they could prevail, transforming Barnes and Noble into a wonderful online retailer that is so incredibly effective at selling self-published books that every last indie author makes a fortune!

Or, you know, they could just not put any more money into Barnes & Noble. The device business is bad--you have to compete with Amazon, which is willing to sell its devices at a loss--and the Web site's going to require some major fixing. "Don't throw good money after bad" is not some alien concept in corporate circles, and $300 million is simply not so much money to a company the size of Microsoft that they can't possibly write it off.

But what if, for some strange reason, Microsoft REALLY REALLY REALLY REALLY wants the Nook? A year ago I said, "at this point any potential buyer will probably wait until B&N actually goes into bankruptcy and then snap up those assets on the cheap." That didn't happen in 2012, but just because Nana made it through her first 47 ER visits doesn't mean she's going to survive visit number 48.

Again, I don't know the future (although clearly I am not optimistic). I do not know for sure that Barnes & Noble is going to go under.

But I do think that it's wise for writers to be prepared for that possibility.

My advice? I'm so glad you asked!

1. Keep your ear to the ground. I'm not yanking my books from Barnes & Noble--they might pull through, after all. But the minute authors start complaining that Barnes & Noble isn't paying them what they are owed, I'm outta there. They are a client, and I do not work for clients who stiff other people, because I know they will soon stiff me.

2. Diversify. A surprising number of authors, especially new authors, put their book up only at Barnes & Noble--it's the name they associate with bookselling. I would say that diversifying away from Barnes & Noble is a really, really good idea these days--if you haven't done that before, do it now. If you sell well at Barnes & Noble (lucky you!) but not so well at other places, start marketing campaigns to build bases at the other retailers. Another thing to keep in mind: If you've got your book up only at Barnes & Noble and Amazon, recognize that, if you don't branch out, there's a solid chance that you'll soon have all your eggs in the Amazon basket. 

Likewise, if you do marketing or sell paper books at your local Barnes & Noble bookstore, start putting out feelers to other bookstores in your area--it can't hurt you no matter what happens to Barnes & Noble. And think outside the bookstore box, if possible. Even traditional publishers market to other types of stores, and I've seen books by local indie authors at stores that carry goods by other types of local artists.

3. Consider the industry impact. Barnes & Noble has a long history of working hand-in-glove with traditional publishers, and publishers have been predicting that the sky will fall if the chain doesn't stay in business.

Are they full of it? Quite possibly, but if the chain does collapse, less-profitable or more-unwary publishers could go down with it. The uncertainty surrounding Barnes & Noble also surrounds traditional publishing, so extra caution is needed before signing any contracts.

A sad but illuminating read

I recently finished Marvel Comics: The Untold Story. Wow.

Basically it's a story of a company making the difficult transition from being a mom-and-pop to being a large public corporation. But from the point of view of the writers and artists, it's a story about getting screwed, very, very badly.

Now, the comics industry has evolved, so these days people are much more likely to get an ownership share of what they create. But that didn't used to be the case--it used to be that, if you wanted to work in comics, you had to work as a hired hand--and what's alarming about it is how normal that seemed to everyone.

In fact, there are a couple of places in the book where people--sometimes other comics people--express surprise at the notion that the creator of a character would dare expect an ownership share! After all, they didn't contribute anything!

Wow. Wowowowow.

And very enlightening, no?

What does a person mean when they say that the creator of a character didn't contribute anything to it?

Well, for starters, I think there's that very human tendency to give yourself credit for anything that is successful, even if your involvement was tangential. That's definitely a major issue in comics--often you've got one person coming up with the character with input from others, and then still other people develop it. So if you contributed, say, the money, you might well say, "I contributed the money! You, the creator, didn't! My contribution is the only one that matters!"

The other thing is I think an important insight to the corporate mentality: For-profit corporations exist to make money. Ergo, it's easy for people working at corporations to assume that the only thing that counts for anything is money.

I remember at one point someone was confused because some corporation was claiming that they needed to restructure because they weren't getting enough "respect." The person found that baffling, because why the hell would you undergo the trouble and expense of restructuring in order to get respect? That sounds neurotic at best. And I had to explain that, in business speak, "respect" means "money from investors." A "good" business is a profitable business--it doesn't matter if they make money by poisoning small children, as long as they are making money, they are "good." If they are making more money, they are "better."

If you are in an environment where the only thing that is recognized as positive and worthwhile is money, then it can become very, very easy to dismiss other kinds of contributions. That's why one person can create (out of thin air) a character worth billions of dollars, and another person can, with complete honesty, express their sincere opinion that the first person did not contribute anything to that character.

Many of Marvel's artists and writers experienced true poverty, and in some cases they got desperate enough to sue. Marvel defended itself very aggressively (and why shouldn't they, these people had contributed nothing), and even went so far as to countersue people for amounts of money that were piddling to Marvel but doubtless ruinous to those people. They don't apologize for this--they regard these people as thieves who are trying to get something for nothing.

The only thing protected people was insisting on having fair contracts. That was it. Anyone who expected largesse at any time from any of Marvel's various owners got the shaft. Of course they did. They hadn't contributed anything!